Can Online Oracle Jeff Bezos Be the Prince of Print?

When I first learned that you had quietly (and quickly) annexed the Washington Post, I was, like many newsmen, baffled and even angered. In former years I had worked for two family-owned newspapers, the New York Times and the pre-Murdoch Wall Street Journal, and I had come to revere their traditions and their integrity. My reaction: You had conquered the book business with your voracious Amazon, Jeff, but please leave newspapers alone.

Then two issues became clear: First, you'd probably made a damned good deal with the Post. Second, the newspaper business needs you and your $25.2 billion checkbook.

I bring a certain perspective to this issue, Jeff. I spent 20 years as editor-in-chief of Variety, once a family-owned newspaper that was taken over by Reed Elsevier, an Anglo-Dutch conglomerate. Over the past decade, that company's inept policies and corrosive corporate culture all but destroyed what once was a very profitable, respected brand. So while quarreling families can screw up a business, Jeff, so can mindless corporations. Variety is now in better hands.

You are not alone in your new focus on newspapers, Jeff. John Henry, an owner of sports franchises, has just bought the Boston Globe from the New York Times, paying $70 million for a paper that had sold for $1.1 billion in 1993. The Koch brothers, among others, are sniffng around the Los Angeles Times and Chicago Tribune, and Warren Buffett has become a newspaper owner and continues to look at other deals. The consensus is that the typical newspaper is worth one tenth of its value compared with 10 years ago, so there are values to be exploited.

But do you have a strategy, Jeff, to pull newspapers out of the doldrums? As the man who popularized e-books and Kindle, you are keenly aware that media entities can figure out how to make money from their readers, not just from their advertisers. Historically, advertisers have accounted for 80% of newspaper revenue, but now some, like the New York Times, are collecting a bigger share of their income from readers. Circulation revenue throughout the industry was up 5% last year -- a significant turnaround.

All this suggests that the Post, your new toy, could develop a more personalized and targeted form of content with its reader base. In surveying the New York Times, analyst Edward J. Atorino noted that "circulation can carry the ball, online will grow and the degree of confidence is impressive" (he was quoted in the Times itself).

Still, advertising remains a hurdle. Geographically branded media businesses (i.e., local) are hard to scale in a digital economy. National advertisers want to buy the whole country, not a specific city -- and alas, the same prevails for most local advertisers.

In analyzing your acquisition, Jeff, the Economist declared, "After years of selling cheap goods to others, Mr. Bezos may have found his own bargain." Still, some cool strategy is needed. The Post's newspaper division lost $53.7 million last year, and the Graham family kept its education division, among others, out of the deal.

It is assumed, Jeff, that while you've made the customary promise to retain present management, you will bring in your own media gurus to implement new policy. And therein lies another potential danger.

Reed Elsevier, during its years owning Variety, constantly appointed and replaced corporate "deep thinkers" and financial gurus to run the business. Faced with reduced advertising, their only epiphany was to cut costs -- and keep cutting costs.

Under Penske Media Corporation, Variety has been re-energized with a newsroom that aims to think digital first, with social media and video becoming top priorities. The weekly print edition has been reimagined as a serious business-focused journal with a global point of view. With a staff of more than 120 reporters and editors, at Variety and other entities, PMC is striving to forge new alliances. A global TV alliance will soon be announced, as was a partnership with Univision built around Spanish-language entertainment news.

The mood throughout the publishing business is one of reinvention. But let me remind you, Jeff, this is not for guys who want to fly at 50,000 feet; this is a ground war -- every day and every story.

Are you ready to fight this battle over what remains of the Washington Post?